Tuesday, August 16

The price of electricity exceeds € 300 / MWh: a new historical record for a runaway end of the year

We have new historical record in the price of electricity. 302.48 euros per megawatt hour at the wholesale price, according to data from the Iberian Energy Market Operator (OMIE). For the first time, the price of electricity beats the barrier of 300 euros on average and everything indicates that we will end the year with the price of electricity runaway, placing December as the most expensive month in history.

During the past weeks the market seemed to have given a slight respite, but with the arrival of low temperatures and the increase in the price of gas, a price that most experts have already warned would rise to these levels has shot up again.

Europe trembles at the price of gas

Today, up to 527 GWh have been traded in Spain, considerably above the 446 GWh that were acquired at the end of September when the price broke the barrier of 200 euros per megawatt hour.

In the early morning hours we have had a minimum of € 251.78 / MWh, but the maximum already reaches € 345 / MWh. It may seem like an inordinate amount, but if we look at Europe we will see that these levels can still grow considerably.

In France, the megawatt hour is paid today at € 353.09 / MWh on average and in Italy at € 347.35 / MWh, both countries above our peak.

The explanation for these prices is a combination of the high demand to heat homes due to the arrival of winter and the price of a gas that in international markets already exceeds 130 euros per megawatt hour. With that price level for gas it is difficult that we see a drop in the wholesale price of electricity, unless it is very windy or the good temperatures in Spain allow us to need less energy.

Winter Energy

Extension until April of the reduction of electricity taxes

María Jesús Montero, Minister of Finance and Public Function, has announced in Congress that the reduction in electricity taxes will last until April 2022. That is, VAT will remain at 10% instead of the usual 21%. The initial measure contemplated until the end of the year, but the Government has decided to extend it.

In addition to VAT, the suspension of the generation tax for companies will also be maintained and the special electricity tax will stand at 0.5%. On the other hand, as of January the charges for the electricity system will go from 4% to 31%. It will then be necessary to see how the final invoice of the consumers is, closely linked to the wholesale price of electricity but also affected by the different percentages of taxes and fees.

The electricity bill is in chaos: the time sections are no longer useful to know when it will be cheaper to put the washing machine

Meanwhile in Europe, the sights are on gas. Reserves are at a minimum and from the European Commission are posing joint gas purchases. An option to “compensate” those countries whose gas reserves are lower and to prevent risks at the national level.

Images | Terry Vlisidis | Jason Blackeye


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